The Money-Market Fund Showdown

With debate raging over the Securities and Exchange Commission’s upcoming proposal to shore up the $2.7 trillion money-market mutual-fund industry, it’s no surprise that organizers of one of the industry’s biggest conferences are expecting their largest attendance in five years next week in Orlando, Fla.

But there’s one guest who won’t be coming to the three-day event: the SEC.

Organizers of the 14th annual Money Market Expo, hosted by iMoney Net, the industry research and commentary firm, wanted an SEC representative to speak at the conference along with a full slate of presenters from industry trade groups and money-market fund companies, says Mike Krasner, managing editor of the company’s editorial team.

After all, the SEC is at the center of the heated debate on how money-market funds should be regulated, which has reached a fever pitch in recent weeks. A proposal from the agency is expected as soon as the end of March.

The main issue: The SEC thinks money-market funds, which suffered a run during the U.S. financial crisis, need further regulation, while much of the industry disagrees.

The conference contacted SEC Chairman Mary Schapiro’s office, as well as commissioner Daniel Gallagher, a Republican. Krasner says he was told that Schapiro was unavailable and that Gallagher was traveling. A third SEC analyst on money-market funds also declined to attend.

A spokesman for the SEC said the agency sent its regrets in September 2011, blaming “calendar considerations.”

“We certainly would like to have someone from the SEC,” Krasner says.

Without the SEC, the conference is likely to be a one-sided view on money-market reform. Other speakers include Paul Schott Stevens, the president of the Investment Company Institute, the fund industry’s largest trade group; Deborah Cunningham, an executive vice president and senior portfolio manager at Federated Investors; and Michael Morin, a portfolio manager at Fidelity Investments.

Both companies and the trade group have been among the most vocal opponents of the SEC’s plans for further regulation. In recent months, they’ve submitted multiple comment letters and met with SEC officials. The agency’s upcoming proposal is expected to include several elements that many in the industry oppose, such as a requirement that money-market funds float their net asset value like a typical mutual fund, a requirement that fund companies hold a capital buffer, and a “liquidity fee,” which would hold back between 3% to 5% of a customer’s funds for 30 days before the customer could redeem in full.

Krasner said the main focus of the three-day event, which is expected to attract about 180 attendees, will be on the SEC’s upcoming proposal.

What’s actually said will be kept to the confines of the Peabody Orlando Hotel. In contrast to last year, when Krasner says he can’t even remember if anyone from the media wanted to attend, outside interest is keen. Yet organizers have opted not to allow the media to attend in deference to speakers, who felt they wouldn’t be able to talk as openly with reporters around.